Cement Companies Found Guilty of Caretalisation by CCI – Corrupt Govt Slept with Companies ?
June 20, 2012
AS the Government went into Paralysis with Scams and massive Corruption in every nook and corner of the country, Regulators became super active. Thanks to the Honorable Supreme Court of India delivering Landmark judgement in Telecom Spectrum Scam which gave a big boost to other Lower Courts and other Institutions to deliver Justice without any fear or greed.
A year ago, we had published the dark side of Union Minister KamalNath openly demanding his cut in awarding Highway Tenders. During his regime as Commerce Minister , the Cement companies cartel may have been formed and started rigging prices causing undue hardships for home buyers and of-course the Inflation. Neither Dr. Singh nor FM Pranab were worried, but the Builders Association of India decided to knock the doors of CCI – Competition Commission of India.
In yet another landmark ruling, the CCI has finalized its investigation into the Indian Cement industry and ruled that it is a cartel and imposed a penalty of 8% of average turnover of the past three years. The CCI report is not publicly available and hence the companies and the exact quantum of penalties are not yet known. Yes the companies can appeal this in the Supreme Court, but we think the chances of sailing over the tide are remote.
Future of Cement Sector – Refrain from BUYING the large-cap stocks aggressively at current valuations as CCI order has the potential to worsen things further. Limestone royalties are up for revision, Coal India’s coal production has many claimants, Railways used to have a very steep differential freight tariff for iron ore exports. Most worrying and watched
issue would be the impact on current cement pricing, and whether there would be pressure to roll back cement price hikes and limit them in the near future.